For Californians Drowning in Healthcare Costs, Governor’s Race Offers Few Answers

When Ashley Porter began slurring her speech one October day four years ago, doctors suspected a stroke. A spinal tap, an MRI, dozens of blood draws, another MRI, and a night spent at the hospital were followed, finally, by an answer: Porter had multiple sclerosis.

Her shock turned to outrage, she said, when she received the roughly $180,000 hospital bill, even though insurance covered most of it.

Porter and her husband have insurance through two separate employer plans yet have spent at least $75,000 a year — roughly a quarter of their gross income — on medical expenses since her diagnosis.

“It is terrifying,” said Porter, who works in transportation sales in the San Francisco Bay Area. “I can’t imagine having this disease and not making the kind of income that we make.”

With health insurance premiums and hospital prices rising faster than inflation, more than 40% of adults nationally struggle to afford their care and, like most, want the government to address it.

The average premium for a California family with employer-sponsored coverage has hit nearly $28,400 a year, up 24% since 2022, much more than workers’ wages. Amid skyrocketing healthcare costs, the gubernatorial candidates’ proposals remain short on specifics about funding or implementation to address this top priority for voters in the nation’s largest healthcare market.

“People are hungry for pretty aggressive action on healthcare spending,” said Kristof Stremikis, director of market analysis and insight at the California Health Care Foundation, a nonprofit philanthropic organization specializing in healthcare research and education.

“Regardless of who our new governor is and who our new state policymakers are in the next year, they have a mandate,” he said.

Nearly two-thirds of Californians worry about receiving an unexpected medical bill, surpassing financial concerns such as the cost of rent or food, according to a 2025 CHCF-NORC survey. Six in 10 said they or a family member had skipped care because of cost.

Democrat Xavier Becerra, the former U.S. health secretary who has a commanding polling lead in the race for governor, has vowed to negotiate lower drug prices and go after anticompetitive practices as he did as attorney general in a landmark antitrust settlement with hospital giant Sutter Health.

He has also said that Congress should restore an estimated $900 billion in federal Medicaid cuts and reinstate enhanced Affordable Care Act tax credits that President Donald Trump and the Republican-controlled Congress allowed to expire, causing insurance premium payments to increase for millions of Americans. Both are national Democratic priorities outside a governor’s purview.

Former Fox News host Steve Hilton, Becerra’s Republican opponent, has said he’d build on existing state laws governing price transparency and prescription drug middlemen known as pharmacy benefit managers to lower costs. And he wants to partially replace Medi-Cal, the state Medicaid program, with personal healthcare accounts of up to $10,000 a year — a concept unlikely to gain traction in a statehouse controlled by Democrats.

Both candidates declined multiple interview requests to discuss their health policies.

Xavier Becerra, the Democratic candidate for California governor, mingles with
supporters at a rally in Santa Rosa on Oct. 8. (Christine Mai-Duc/KFF Health News)

Steve Hilton, Republican candidate for California governor, speaks to the media at a campaign event on June 11. (Eric Thayer/Los Angeles Times via Getty Images)

Healthcare Costs and Consolidation

From 1970 to 2025, U.S. health expenditures ballooned from $75 billion to a projected $5.7 trillion, rising nearly 40% from 2020. By 2032, the Centers for Medicare & Medicaid Services predicts, health spending will account for more than a fifth of the U.S. economy.

Payments to hospitals, doctors, and clinics account for much of the inflation, along with rising prescription drug prices. Research shows that escalating mergers among physician practices, hospital groups, and insurers further stifled competition and raised prices.

In the 2018 lawsuit Becerra filed against Sutter Health, he accused the health system of using its market dominance to drive up hospital prices in Northern California, where procedures cost as much as 30% more than in other parts of the state.

The Sacramento-based not-for-profit system, which admitted no wrongdoing, paid an unprecedented $575 million fine and agreed to stop certain business practices, including imposing “all-or-nothing” terms on insurers that forced them to contract with the system’s entire network of clinics and hospitals.

“It was the biggest victory in antitrust and hospitals ever,” said Richard Scheffler, director of the Nicholas C. Petris Center on Health Care Markets and Consumer Welfare at the University of California-Berkeley. A report by the center, which conducts economic research on health policy topics, formed the basis of Becerra’s suit.

“But things change,” Scheffler said.

While the settlement likely discouraged similar practices by other hospital chains, he said, any relief has since been eclipsed by rapid consolidation in the healthcare industry.

At a press event in October, Becerra said he would work with the next state attorney general to “continue to look at the types of practices in healthcare that drive up costs.”

Hilton has said that he wants to increase competition by producing more generic drugs through California’s CalRx initiative, which aims to cut drug prices. He has said he wants to allow consumers to pick cheaper, pared-down insurance plans and force healthcare providers to make their prices more transparent.

Hospitals Under the Scope

Health economists say rising healthcare costs eat up money that employers might otherwise use for raises or new hires, depressing wages. That can be a double whammy for workers already struggling to meet basic needs and, consumer advocates warn, could increase medical debt, which 40% of California adults already report carrying.

Kia Frazier-Hill and her husband didn’t expect to be among them. She knew it would be expensive when he landed in the emergency room and was hospitalized at an out-of-network facility.

The astronomical prices gave her sticker shock: $17,507 for a night in the intensive care unit; $427.89 for a test for flu, covid, and RSV, or respiratory syncytial virus; $2.60 for a single tablet of generic, regular-strength Tylenol. Their bronze-tier plan from Covered California, the state’s ACA insurance marketplace, paid the vast majority, nearly $60,000, but the $7,500 balance has been in collections for months.

“We’re drowning,” Frazier-Hill said. “It just doesn’t make any sense what they’re charging.”

Researchers have found that hospital prices are even higher in uncompetitive markets.

California is trying to corral such runaway health costs through its Office of Health Care Affordability, which has directed most health systems, hospitals, insurers, and large healthcare provider groups to hold their spending growth to 3.5% this year.

Hospital and doctor groups, which have donated to Becerra’s campaign, say the cap is too low and will limit patient care, not improve efficiency.

“Hospitals have a mission to take care of people, save lives, and that costs money,” said Amber Ott, senior vice president of financial policy for the California Hospital Association, which is challenging the affordability board’s caps in court. “It’s hard to look at just one piece of the ecosystem and say that’s where the problem is.”

While hospitals are not the only drivers of high costs, they are the largest. According to the state, at least 40% of total health spending by commercial insurance plans went to hospitals in 2024, the latest data available.

People gather for an Aug. 13 town hall focused on high healthcare costs hosted by
Health Access California, a health consumer advocacy organization, in Gilroy, California.
Many residents in the region work on farms or in factories and have limited access to health
insurance. (Christine Mai-Duc/KFF Health News)

Low-Hanging Fruit

As rising healthcare costs have driven up spending by public insurance programs and put pressure on state budgets, states have taken more of a lead in tackling affordability. But they are limited in what they can do. While California has led on prescription drug price transparency and negotiating more competitive marketplace plan rates, it lags other states in some respects, said Sabrina Corlette, a co-director of the Center on Health Insurance Reforms at Georgetown University.

“There’s a lot more they could do to rein in underlying drivers of healthcare costs,” she said of state policymakers.

Some states, for instance, have banned certain facility fees, which allow hospitals to charge higher prices than unaffiliated doctors’ offices even when services are rendered at outpatient clinics that they own. Corlette said such fees increase patient costs while incentivizing hospitals to gobble up more clinics and physician practices.

Oregon capped the payments its public employee health plans make to hospitals, reducing patients’ out-of-pocket spending on outpatient procedures by nearly 10%. Rhode Island limits hospital cost growth through an annual rate review of state-regulated health plans. California has done neither.

California healthcare advocates and researchers say there’s plenty of low-hanging policy fruit that could bring consumers more immediate relief. Insurers and providers could work to automate notoriously inefficient prior authorization procedures, while lawmakers could mandate shorter insurer response times to prior authorization requests, as New Jersey and Vermont have done.

The legislature could also broaden bans on anticompetitive contracting, much like Connecticut and Texas, or expand on Los Angeles County’s program to purchase and forgive residents’ medical debt.

Heath policy experts say even those relatively modest ideas would be a heavy lift in Sacramento, where the industry spends tens of millions of dollars annually to influence lawmakers and state agencies.

“It’s a big, complicated system, and the money is so gigantic,” said Glenn Melnick, a healthcare economist at the University of Southern California. “At some point, the legislature has to hold the line and say, ‘Look, it is the golden goose, but we’re going to have to feed it a little bit less.’”

KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about KFF.This article first appeared on KFF Health News and is republished here under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.